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VCT Summary & Principal Risks

A VCT is an investment vehicle primarily investing in a portfolio of small, unquoted UK companies.  The underlying investments are higher risk than established businesses and it will be difficult to realise value in the short term.  VCTs should therefore be seen as long term investments.  Investments made by the VCT can fail or fall in value and you may get back less than you invest.

To compensate for the higher risks, VCTs offer generous tax breaks, including income tax relief of up to 30% in the current tax year.  The shares must be held for five years, or the income tax relief must be repaid. The basis of tax reliefs are subject to change and can be withdrawn if a VCT does not meet certain criteria.

Although VCTs are quoted on the London Stock Exchange, there is a limited secondary market for shares and most VCTs trade at a discount to net asset value. Some VCT managers will buy back shares at a set discount.

Charges on VCTs are higher than many other investment products, reflecting the high cost of managing the portfolios. Typically, this will comprise an up front charge of around 5% of funds raised and annual running costs of 3.5%.

Past performance is not a guide to the future.

If the VCT fails to raise the full subscription, it may be difficult to achieve a spread of investments and diversity, thereby increasing risk.

VCTs are only suitable for experienced investors with a portfolio of other investments and who are comfortable with the inherent risks.

I agree that I have read and understood the risk warnings above and I am happy to proceed on an execution only basis (i.e. without advice).